Attached files
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| 8-K - CURRENT REPORT - US ECOLOGY, INC. | usecology_8k.htm |
Exhibit 99.1
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
On November 1, 2015, US Ecology, Inc.’s (the “Company” or “US Ecology”) subsidiary, EQ Industrial Services, Inc. (the “Seller”) completed its previously announced sale of its subsidiary, Allstate Power Vac, Inc. (“Allstate”), an industrial services business, to ASPV Holdings, Inc., a private investor group (the “Buyer”), in exchange for a total purchase price, including fees and expenses, of approximately $58.8 million cash, subject to certain post-closing adjustments for working capital.
The accompanying unaudited pro forma consolidated balance sheet as of September 30, 2015 and the unaudited pro forma consolidated statements of operations for the nine months ended September 30, 2015 and the year ended December 31, 2014 have been derived by the application of pro forma adjustments to our historical consolidated financial statements. These unaudited pro forma consolidated financial statements reflect the sale of Allstate as if it had occurred on June 17, 2014, the date of acquisition of EQ Holdings, Inc. As the purpose of the pro forma information provided below is to illustrate the results of operations of the Company without the disposed Allstate operations, the effects of the transaction, including the estimated gain on sale, disposal costs and related tax effects, were excluded from the pro forma statement of operations. The pro forma adjustments are based upon available information and assumptions that management believes are reasonable.
You should read this information together with the following:
| · | the accompanying notes to the unaudited pro forma consolidated financial statements; |
| · | the separate historical unaudited consolidated financial statements of US Ecology as of and for the three and nine months ended September 30, 2015 included in US Ecology’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2015, filed November 4, 2015; |
| · | the separate historical consolidated audited financial statements of US Ecology as of and for the year ended December 31, 2014, included in US Ecology’s Annual Report on Form 10-K for the year ended December 31, 2014, filed March 2, 2015. |
The unaudited pro forma consolidated financial statements are presented for informational purposes only. The following unaudited pro forma consolidated financial data is not necessarily indicative of our financial position or results of operations that actually would have been attained had the sale of Allstate occurred at the dates indicated and is not necessarily indicative of our financial position or results of operations that will be achieved in the future.
| 1 |
UNAUDITED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 2015
(In thousands)
| Historical (1) | Allstate Disposition (2) | Pro Forma | ||||||||||
| Assets | ||||||||||||
| Current Assets: | ||||||||||||
| Cash and cash equivalents | $ | 9,350 | $ | 58,774 | $ | 68,124 | ||||||
| Receivables, net | 104,283 | 104,283 | ||||||||||
| Prepaid expenses and other current assets | 10,241 | 10,241 | ||||||||||
| Income taxes receivable | 332 | 332 | ||||||||||
| Deferred income taxes | 2,599 | 2,599 | ||||||||||
| Assets held for sale | 78,775 | (78,775 | ) | – | ||||||||
| Total current assets | 205,580 | (20,001 | ) | 185,579 | ||||||||
| Property and equipment, net | 204,387 | 204,387 | ||||||||||
| Restricted cash and investments | 5,773 | 5,773 | ||||||||||
| Intangible assets, net | 243,187 | 243,187 | ||||||||||
| Goodwill | 194,825 | 194,825 | ||||||||||
| Other assets | 9,624 | 9,624 | ||||||||||
| Total assets | $ | 863,376 | $ | (20,001 | ) | $ | 843,375 | |||||
| Liabilities And Stockholders’ Equity | ||||||||||||
| Current Liabilities: | ||||||||||||
| Accounts payable | $ | 16,745 | $ | 16,745 | ||||||||
| Deferred revenue | 7,212 | 7,212 | ||||||||||
| Accrued liabilities | 28,119 | 28,119 | ||||||||||
| Accrued salaries and benefits | 10,624 | 10,624 | ||||||||||
| Income taxes payable | 1,730 | 91 | 1,821 | |||||||||
| Current portion of closure and post-closure obligations | 4,402 | 4,402 | ||||||||||
| Current portion of long-term debt | 3,505 | 3,505 | ||||||||||
| Liabilities associated with assets held for sale | 20,240 | (20,240 | ) | – | ||||||||
| Total current liabilities | 92,577 | (20,149 | ) | 72,428 | ||||||||
| Long-term closure and post-closure obligations | 67,061 | 67,061 | ||||||||||
| Long-term debt | 356,410 | 356,410 | ||||||||||
| Other long-term liabilities | 7,351 | 7,351 | ||||||||||
| Deferred income taxes | 87,771 | 87,771 | ||||||||||
| Total liabilities | 611,170 | (20,149 | ) | 591,021 | ||||||||
| Commitments and contingencies | ||||||||||||
| Stockholders’ Equity: | ||||||||||||
| Common stock | 217 | 217 | ||||||||||
| Additional paid-in capital | 168,978 | 168,978 | ||||||||||
| Retained earnings | 99,509 | 148 | 99,657 | |||||||||
| Treasury stock | (60 | ) | (60 | ) | ||||||||
| Accumulated other comprehensive loss | (16,438 | ) | (16,438 | ) | ||||||||
| Total stockholders’ equity | 252,206 | 148 | 252,354 | |||||||||
| Total liabilities and stockholders’ equity | $ | 863,376 | $ | (20,001 | ) | $ | 843,375 | |||||
See accompanying notes to pro forma consolidated financial statements.
| 2 |
UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2015
(In thousands, except per share amounts)
| Historical (1) | Allstate Disposition | Pro Forma | ||||||||||
| Revenue | $ | 424,797 | $ | 50,999 | $ | 373,798 | ||||||
| Direct operating costs | 297,543 | 40,208 | 257,335 | |||||||||
| Gross profit | 127,254 | 10,791 | 116,463 | |||||||||
| Selling, general and administrative expenses | 71,075 | 9,910 | 61,165 | |||||||||
| Impairment charges | 6,700 | (3) | 6,367 | (3) | 333 | |||||||
| Operating income | 49,479 | (5,486 | ) | 54,965 | ||||||||
| Other income (expense): | ||||||||||||
| Interest income | 64 | 64 | ||||||||||
| Interest expense | (16,208 | ) | (27 | ) | (16,181 | ) | ||||||
| Foreign currency loss | (1,769 | ) | (1,769 | ) | ||||||||
| Other | 1,156 | 99 | 1,057 | |||||||||
| Total other income (expense) | (16,757 | ) | 72 | (16,829 | ) | |||||||
| Income before income taxes | 32,722 | (5,414 | ) | 38,136 | ||||||||
| Income tax expense (benefit) | 14,815 | (2,057 | )(4) | 16,872 | ||||||||
| Net income | $ | 17,907 | (3) | $ | (3,357 | )(3) | $ | 21,264 | ||||
| Earnings per share: | ||||||||||||
| Basic | $ | 0.83 | $ | 0.99 | ||||||||
| Diluted | $ | 0.82 | $ | 0.99 | ||||||||
| Shares used in earnings per share calculation: | ||||||||||||
| Basic | 21,619 | 21,619 | ||||||||||
| Diluted | 21,723 | 21,723 | ||||||||||
See accompanying notes to pro forma consolidated financial statements.
| 3 |
UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2014
(In thousands, except per share amounts)
| Historical (5) | Allstate Disposition | Pro Forma | ||||||||||
| Revenue | $ | 447,411 | $ | 37,023 | $ | 410,388 | ||||||
| Direct operating costs | 301,625 | 28,798 | 272,827 | |||||||||
| Gross profit | 145,786 | 8,225 | 137,561 | |||||||||
| Selling, general and administrative expenses | 73,336 | 6,623 | 66,713 | |||||||||
| Operating income | 72,450 | 1,602 | 70,848 | |||||||||
| Other income (expense): | ||||||||||||
| Interest income | 107 | 107 | ||||||||||
| Interest expense | (10,677 | ) | (107 | ) | (10,570 | ) | ||||||
| Foreign currency loss | (1,499 | ) | (1,499 | ) | ||||||||
| Other | 669 | (409 | ) | 1,078 | ||||||||
| Total other income (expense) | (11,400 | ) | (516 | ) | (10,884 | ) | ||||||
| Income before income taxes | 61,050 | 1,086 | 59,964 | |||||||||
| Income tax expense | 22,814 | 413 | (4) | 22,401 | ||||||||
| Net income | $ | 38,236 | $ | 673 | $ | 37,563 | ||||||
| Earnings per share: | ||||||||||||
| Basic | $ | 1.78 | $ | 1.74 | ||||||||
| Diluted | $ | 1.77 | $ | 1.73 | ||||||||
| Shares used in earnings per share calculation: | ||||||||||||
| Basic | 21,537 | 21,537 | ||||||||||
| Diluted | 21,655 | 21,655 | ||||||||||
See accompanying notes to pro forma consolidated financial statements.
| 4 |
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
| (1) | Reflects the historical balance sheet and statements of operations of US Ecology as reported in our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2015, filed November 4, 2015. As of September 30, 2015, the assets and liabilities of Allstate have been classified as held for sale. The sale of Allstate does not meet the requirements to be reported as a discontinued operation as defined in ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. |
| (2) | Reflects the sale of Allstate assets and associated liabilities for $58.8 million in cash, subject to post-closing adjustments for working capital, which were included in US Ecology’s third quarter consolidated financial statements as held for sale as of September 30, 2015. Also includes impact of the estimated gain on the sale of Allstate, net of estimated disposal costs and related tax effects. |
| a. | Gain on Allstate sale is estimated to be approximately $239,000 based on assets and liabilities classified as held for sale as of September 30, 2015. As the Allstate sale did not close until November 1, 2015, assets and liabilities ultimately disposed of and the resulting gain recognized on the Allstate sale could change. |
| b. | Tax effects of gain, net of disposal costs is based on US Ecology’s blended rate of 38.0%. |
| (3) | On August 4, 2015, we entered into a definitive agreement to sell Allstate to a private investor group for approximately $58.0 million cash, subject to post-closing adjustments for working capital and capital expenditures. As a result of this agreement and management’s strategic review, we evaluated the recoverability of the assets associated with our industrial services business. Based on this analysis, we recorded a non-cash goodwill impairment charge of $6.7 million ($6.4 million of the impairment charge related to Allstate) in the second quarter of 2015. We calculated the estimated fair value of the industrial services business using a combination of quoted market prices and discounted cash flows. |
| (4) | To record the tax effect of the pro forma adjustments using a blended effective rate of 38.0% related to Allstate. |
| (5) | Reflects the historical statement of operations of US Ecology as reported in our Annual Report on Form 10-K for the year ended December 31, 2014, filed March 2, 2015. |
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